StemCell Therapy

Lake Forest Mar 27, 2020 (Thomson StreetEvents) -- Edited Transcript of CryoPort Inc earnings conference call or presentation Thursday, March 5, 2020 at 10:00:00pm GMT

* Jerrell W. Shelton

Cryoport, Inc. - Chairman, President & CEO

* Mark W. Sawicki

Cryoport, Inc. - Chief Commercial Officer

* Robert S. Stefanovich

Cryoport, Inc. - CFO, Treasurer & Corporate Secretary

B. Riley FBR, Inc., Research Division - Senior Analyst

Janney Montgomery Scott LLC, Research Division - MD, Head of Healthcare Research & Senior Equity Research Analyst

SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst

Kanan, Corbin, Schupak & Aronow, Inc. - Managing Partner

Welcome to the Cryoport, Inc. Full Year 2019 Earnings Conference Call. (Operator Instructions) And the conference is being recorded. (Operator Instructions)

I would now like to turn the conference over to Todd Fromer, the Managing Partner, KCSA. Please go ahead.

Todd Fromer, Kanan, Corbin, Schupak & Aronow, Inc. - Managing Partner [2]

Thank you, operator. Before we begin today, I would like to remind everyone that this conference call contains certain forward-looking statements. All statements that address our operating performance, events or developments that we expect or anticipate occurring in the future are forward-looking statements. These forward-looking statements are based on management's beliefs and assumptions and not on information currently available to our management team. Our management team believes these forward-looking statements are reasonable as and when made. However, you should not place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results, events and developments to differ materially from our historical experiences and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Item 1A, Risk Factors and elsewhere in our annual report on Form 10-K filed with the Securities and Exchange Commission and those described from time to time in other reports, which we file with the Securities and Exchange Commission.

I would now like to turn the call over to Mr. Jerrell Shelton, Chief Executive Officer of Cryoport. Jerry, the floor is yours.

Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [3]

Thank you, Todd. Good afternoon, ladies and gentlemen. Thank you for joining us today. With me this afternoon is our Chief Financial Officer, Mr. Robert Stefanovich; and our Chief Commercial Officer, Dr. Mark Sawicki.

As a reminder, we've uploaded our 2019 Year in Review document to our website. It can be found in the Investor Relations section under Events & Presentations. This document provides a review of our recent financial and operational performance and a general business outlook. So if you have not had a chance to read it, I would encourage you to go to the website and download it.

As with previous quarters, on this conference call, we will provide you with a brief general update. And then we'll move to the question-and-answer session, where we will address your queries regarding our company's results.

Now for the update. We reported record revenues of $33.9 million for fiscal year 2019, an increase of 73% from fiscal year 2018. This strong result was driven partly by our commercial agreements supporting Gilead's YESCARTA and Novartis' KYMRIAH, which contributed $8.3 million in the 12-month period, an increase of 295% or $6.2 million compared with the prior year. Revenue from our commercial agreements is expected to continue to grow throughout 2020 and will include revenue from the commercial launch of bluebird bio's ZYNTEGLO, commencing during the first quarter of 2020.

A record total of 5 Cryoport-supported Marketing Authorization Applications and Biologics Licensing Applications were filed during the fourth quarter of 2019. We expect approximately 10 additional Cryoport-supported MAAs and BLAs to be filed in 2020 based on internal information and forecasts from the Alliance for Regenerative Medicine.

As the number of cell and gene therapies and clinical trials increased, we secured new clients and expanded our market share with the global regenerative medicine market. During our fourth quarter, we added a net total of 11 clinical trials, bringing the total number of regenerative therapy clinical trials supported by Cryoport to a record 436, of which 56 are currently in Phase III compared with 357 trials at the end of 2018, of which 47 were in Phase III.

During the year, to further advance our leadership position, we invested in enhancing our platform by entering the biostorage market with the acquisition of Cryogene and launching the first ever Cryoport Express Advanced Therapy Shipper product line, which guarantees each shipper has been used only for human use, is cleaned with 99.9999% effectiveness and provides complete traceability of all equipment, components and commodities. As a result of these investments last year, we're now providing our global clients with an expanded platform of critical solutions that include both highly differentiated temperature-controlled logistics and biostorage services.

With the regenerative medicine market growing rapidly, Cryoport is developing the network of partners, processes and systems that support a Compliance Unified Ecosystem within the life sciences industry. We have successfully secured several top-tier partnerships, including Lonza, Vineti, McKesson, EVERSANA and further integrating other solutions into the life sciences industry by providing scalable, standardized and compliant solutions focused on the supply chain of regenerative therapies.

In 2020, we are continuing to expand our global supply chain network and platform of advanced therapies for life sciences, including through the build-out of Global Supply Chain Centers in Morris Plains, New Jersey; and Houston, Texas. We believe that Cryoport's strong business model and balance sheet has us well positioned for both continued organic and acquisitive growth. Our market-leading position and superior technology platforms also give us the ability to scale our operations and to expand our support of the global regenerative medicine ecosystem as the market continues to demonstrate rapid and accelerating growth.

Now I'll turn the call over to the operator to open the telephone lines for your questions and our answers.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Brandon Couillard with Jefferies.

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Unidentified Analyst, [2]

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This is [Matt] on for Brandon. First one, if we look at the clinical trial revenues or the noncommercial biopharma revenues, essentially flat in the second half of the year versus the first half of the year, even though you added more than 20 new clinical trials in the -- versus the first half. Can you just help us reconcile the trend of your ongoing growth in supported clinical trials across the 3 phases? Is it simply timing issues as the trials transition and ramp from their various clinical phases? And then as a follow-up to that, are the ballpark revenue ranges or bands you have historically laid out by clinical trial phases still relevant today?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [3]

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Yes. So there's not all of that in the answer, but I'm going to turn that over to Mark Sawicki to answer the question.

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [4]

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Yes, thanks. So the bottom line on clinical trial activity and associated revenue is that we use clinical trials as a pipeline for ultimately commercial revenue, which has by far a larger revenue basis associated with a given program and cycle. Clinical does, in its inherent nature, have more volatility. And volatility can be associated with interruptions in trials, holds between phases or terminations due to lack of progression, which obviously, we outlined in the earnings release.

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Unidentified Analyst, [5]

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And then on the biostorage side, you made some progress cross-selling to your existing customer base there and recently onboarded several clients to the Cryogene platform. Curious if you can just kind of provide any initial feedback, what it is about their offering that's resonating with your customers? And then anything you're penciling in for 2020 in terms of revenue synergies from Cryogene?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [6]

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You want to take that, Mark?

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [7]

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Sure. So we're absolutely seeing crossover between the Cryoport and Cryogene businesses, which is one of the reasons we moved forward with the acquisition last year. And we do believe that, that will accelerate in this fiscal year. The primary driver behind that is folks moving towards an integrated or a single-supplier supply chain, so they want to not only be able to support the distribution aspects through our supply chain logistics platform, but also storage.

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Operator [8]

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The next question comes from Puneet Souda with SVB Leerink.

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Puneet Souda, SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst [9]

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So Jerry, first one for you and maybe

Mark can chime in into it too. Wanted to understand why commercial revenue was stepping down here when revenue for both the commercial therapies were up. Can you provide maybe how much of that was ASP driven? Or is there some other dynamic that we're unclear on? And just wanted to understand if -- how is that shaping up in the first quarter.

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [10]

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Yes. Yes, that is a good question, Puneet. The commercial revenues that we report are divided into 2 primary categories. One of these is patient and shipping-related revenues. And the second category is services, where, for example, our customers asked us for consulting or lane validations or custom secondary packaging or program management and that sort of thing. So in the fourth quarter, there was a bit of a drop from the third quarter revenue as a result of the nonshipping services-related revenue dropping.

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Puneet Souda, SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst [11]

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And would you expect that to recover again here in the first quarter? Or what's your expectation on that revenue? Or is that something we should expect to decline through the year?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [12]

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It's a constant flow. It just had a drop in that last quarter. But it's -- there's constantly activity in these areas. There's always a need here.

This is evolving -- this is an evolving space. And so it's just -- it's going to continue to develop.

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [13]

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Yes. Puneet, it's -- as Jerry has said -- yes, the numbers will rebound.

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Puneet Souda, SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst [14]

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Sorry, I didn't catch that. Can you repeat?

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [15]

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I said -- yes, I said the numbers will rebound.

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [16]

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Mark said the same thing I said in a different way. He just simply said, the numbers will come back if we just had a drop for a quarter in those numbers.

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Puneet Souda, SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst [17]

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Okay. All right. And then on clinical trials, I have a bigger question. I mean I appreciate there were 2 high-volume trials that were impacting the quarter. But wanted to get a view into what you're seeing so far in the year. Was that sort of onetime phenomena, one-off phenomena that you saw here? And I understand these are large clinical trials, but any sense that you're getting in 2020 so far on any other trials or a recovery in -- for Phase III trials?

Continued here:
Edited Transcript of CYRX earnings conference call or presentation 5-Mar-20 10:00pm GMT - Yahoo Finance

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